Traders expect limited market impact from the Chinese government ending its licensing system for imported copper scrap, although the move might result in shorter customs clearance times, industry sources said Thursday.
China's Ministry of Commerce said August 26 that it would abolish the import licensing system for copper scrap, aluminum scrap and steel scrap, effective September 1.
"In theory, the move should favor China's copper scrap trading sector," said He Xiaohui, a commodity analyst with Beijing Antaike, the state-owned nonferrous metals information division. "But to what extent will it positively impact the sector, we need some time to wait and see how well the policy is implemented."
Jack Yeung, a business professor at City University of Hong Kong, said the end of the licensing would simplify the import approval process, accelerate customs clearance and cut importing costs.
But Chinese industry sources said imported copper scrap would still face other stringent environmental protection rules.
On August 29, the China Nonferrous Metals Industry Association's Recycling Metal Branch told Chinese media that import procedures would be simplified after the move, even though the scrap would still have to comply with the country's environmental standards for imported materials that limit, for example, total weight of radioactive waste. IMPORT VOLUMES NOT EXPECTED TO CHANGE
Copper scrap traders in China and North America said the end of the import license would not significantly impact their copper scrap trade volumes, citing existing quota limits and other market factors.
"My customers in Ningbo [Zhejiang Province] said there is no material impact [stemming from the abolition of import license] as it is not a big issue," said a trader based in North America.
The trader said most of her clients' import volumes are controlled by import quotas set each year. "For traders who do not have import quota, they will not be able to import," she said.
A Hong Kong-based copper scrap trader said he has not done any deals in recent months due to weaker international prices.
"Copper scrap is a cause of pollution, so the state has very strict environment protection requirements, making it hard to deal in this trade," he said. "A lot of copper scrap buyers are the bigger state-owned enterprises who are allotted quotas, while the smaller ones aren't."
China imported 349,405 mt of copper scrap in July, down 19% year on year, according to General Administration of Customs data.